Definitely put the distributor back to where it was when the tractor would run. At that point, you're very close to right, and it's a matter of tuning by ear to get it perfect. Slight movements of the distributor only, nothing that can be measured in "inches" that's for sure.
It really sounds like you didn't get the carburetor and governor synchronized. There is a square tab that comes off the governor shaft and fits into a square notch in the carburetor shaft. It's a blind hole, so you can only guess if you have it right. It's very easy to get it wrong.
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